LONDON, Oct 24 (Reuters) - Britain’s biggest rent-to-own company BrightHouse will pay 14.8 million pounds ($19.7 million) to nearly a quarter of a million customers it failed to treat properly, the Financial Conduct Authority said on Tuesday.
Rent-to-own refers to people having use of household goods such as fridges or washing machines in return for regular payments for up to three years, with the option of an outright purchase.
BrightHouse has committed to paying back money, some in cash, the rest in adjustments to customer balances, for “lending which may not have been affordable and payments which should have been refunded”, the FCA said in a statement.
“During the time in question, BrightHouse was not a responsible lender and failed to meet our expectations of firms in this sector,” said Jonathan Davidson, executive director of supervision at the watchdog.
“I am pleased that it has agreed to provide redress to those customers affected by these historic practices.”
The FCA is scrutinising so-called “high cost” credit, and how people who get into debt are given advice on repayments. It has been working with BrightHouse since late 2014.
BrightHouse, part of private equity firm Vision Capital, said it apologises to affected customers and will make sure they are reimbursed as soon as possible.
It will send letters to all affected customers by the end of the year.
Lawyers said the refunds were a warning to the sector.
“This firm seems to have regarded its customers as cash cows and failed to take account of the FCA’s core mantra, that of treating people fairly,” said Bill McCaffrey, a financial services partner at CMS law firm.
$1 = 0.7587 pounds Reporting by Huw Jones; Editing by Dale Hudson